The Hague, April 29, 2021
“Shell has made a strong start to 2021, generating over $8
billion of cash in the quarter. Our integrated business model is
ideally positioned to benefit from recovering demand. As previously
announced, the first quarter 2021 dividend per share has been
increased by around 4%, in line with our progressive dividend
policy. We have reduced net debt by more than $4 billion this
quarter, progressing towards the $65 billion milestone to increase
shareholder distributions. Our competitive and robust financial
performance provides the platform to achieve the goals of our
Powering Progress strategy.”
Royal Dutch Shell Chief Executive Officer, Ben van
Beurden
IN POLE POSITION TO BENEFIT FROM ECONOMIC
RECOVERY
- Sector-leading cash generation over the last 4 years. Strong
operational and financial performance across the segments
highlights the benefits of our integrated business model. Resilient
Integrated Gas and Marketing, robust Upstream and outstanding
Chemicals results.
- Net debt reduction of over $4 billion to $71.3 billion,
progressing towards $65 billion. Once this milestone is achieved,
we target to increase shareholder distributions to 20-30% of our
cash flow from operations.
- Delivering on our commitment to further improve transparency
and understanding of our businesses - introducing new and enhanced
disclosures. First energy company to submit its Energy Transition
Strategy to shareholders for an advisory vote at the Annual General
Meeting.
$ million |
Adj. Earnings1 |
Adj. EBITDA (CCS) |
CFFO ex WC |
CFFO |
Cash capex |
Integrated Gas |
1,415 |
3,206 |
3,653 |
2,491 |
1,015 |
Upstream |
963 |
5,387 |
4,702 |
4,108 |
1,534 |
Oil Products |
877 |
2,112 |
3,313 |
893 |
668 |
Refining & Trading |
(105) |
467 |
|
|
|
Marketing |
982 |
1,646 |
|
|
|
Chemicals |
730 |
1,041 |
1,045 |
324 |
730 |
Corporate |
(666) |
(172) |
(30) |
478 |
28 |
Less: Non-controlling interest |
85 |
85 |
|
|
|
RDS |
Q1 2021 |
3,234 |
11,490 |
12,683 |
8,294 |
3,974 |
Q4 2020 |
393 |
8,319 |
6,624 |
6,287 |
5,503 |
1 Income/(loss) attributable to shareholders for Q1 2021 is $5.7
billion. Reconciliation of non-GAAP measures can be found in the
unaudited results, available on www.shell.com/investors.
$ billion |
Q1 2020 |
Q2 2020 |
Q3 2020 |
Q4 2020 |
Q1 2021 |
Divestment proceeds |
2.2 |
0.7 |
0.9 |
0.2 |
3.4 |
Free cash flow |
12.1 |
0.2 |
7.6 |
0.9 |
7.7 |
Net debt |
74.4 |
77.8 |
73.5 |
75.4 |
71.3 |
Q1 2021 FINANCIAL PERFORMANCE DRIVERS
INTEGRATED GAS, RENEWABLES AND ENERGY
SOLUTIONS
Key data |
Q4 2020 |
Q1 2021 |
Q2 2021 outlook |
Realised liquids price ($/bbl) |
37.68 |
55.74 |
— |
Realised gas price ($/mscf) |
4.33 |
5.41 |
— |
Production (kboe/d) |
942 |
967 |
880 - 940 |
LNG liquefaction volumes (MT) |
8.21 |
8.16 |
7.6 - 8.2 |
LNG sales volumes (MT) |
16.89 |
15.80 |
— |
- Adjusted Earnings and CFFO excluding working capital benefited
from higher realised prices.
- Trading and optimisation contributions to earnings were
significantly below average.
- Net financial impact from the Texas winter storm was limited as
positive trading margins were offset by provisions ($0.4 billion
after tax) due to related counterparty credit risk.
- Strong cash conversion with CFFO excluding working capital of
$3.7 billion, impacted by positive derivatives movement mainly
driven by variation margin inflows and a non-cash mark-to-market
impact in Adjusted Earnings.
- Q2 2021 production and LNG liquefaction volumes outlook are
expected to be impacted by maintenance activities.
UPSTREAM
Key data |
Q4 2020 |
Q1 2021 |
Q2 2021 outlook |
Realised liquids price ($/bbl) |
40.75 |
55.17 |
— |
Realised gas price ($/mscf) |
2.87 |
3.64 |
— |
Liquids production (kboe/d) |
1,537 |
1,579 |
— |
Gas production (mscf/d) |
4,837 |
5,126 |
— |
Total production (kboe/d) |
2,371 |
2,462 |
2,150 - 2,350 |
- Higher prices, higher demand and lower depreciation drove
higher Adjusted Earnings.
- Adjusted Earnings reflected favourable comparative deferred tax
movements which were partly offset by around $200 million
comparative adverse currency effects.
- Strong cash conversion with CFFO excluding working capital of
$4.7 billion, $1.8 billion above Q4 2020.
- Production 4% above Q4 2020, driven by demand seasonality.
- Q2 2021 total production outlook is expected to be impacted by
lower seasonal gas demand and divestments.
OIL PRODUCTS
Key data |
Q4 2020 |
Q1 2021 |
Q2 2021 outlook |
Sales volumes (kb/d) |
4,781 |
4,164 |
4,000 - 5,000 |
Refining & Trading sales volumes (kb/d) |
2,444 |
1,944 |
— |
Marketing sales volumes (kb/d) |
2,338 |
2,220 |
— |
Refinery utilisation (%) |
72 |
72 |
73 - 81 |
Global indicative refining margin ($/bbl) |
1.59 |
2.69 |
— |
- Small improvement in refining margins from Q4 2020, lower
intake and utilisation due to lower demand and impact of Texas
winter storm.
- Trading and optimisation contributions to earnings were
average.
- Realised Marketing margins remained resilient despite the
impact of COVID-19 lockdowns in certain markets, particularly
Europe.
- Lower operating expenses driven by lower maintenance costs,
Marketing spend and underlying structural cost reductions.
- Strong cash conversion with CFFO excluding working capital of
$3.3 billion.
CHEMICALS
Key data |
Q4 2020 |
Q1 2021 |
Q2 2021 outlook |
Sales volumes (kT) |
3,718 |
3,583 |
3,500 - 3,800 |
Manufacturing plant utilisation (%) |
79 |
79 |
76 - 84 |
- Higher base and intermediate chemicals margins across most
product segments complemented by margin optimisation
initiatives.
- Higher joint ventures income due to improved margins and
continued strong demand in Asia.
- Lower operating expenses driven by lower maintenance costs,
timing of provisions and underlying structural cost
reductions.
- CFFO excluding working capital negatively impacted by timing
effect of dividends from joint ventures and associates.
CORPORATE
Key data |
Q4 2020 |
Q1 2021 |
Q2 2021 outlook |
Adjusted Earnings ($ million) |
(836) |
(666) |
(600) - (700) |
- Net debt decreased by $4.1 billion to $71.3 billion in Q1 2021
driven by higher cash flow from operations and divestment proceeds
offset by large working capital outflow.
UPCOMING INVESTOR EVENTS
4 May 2021 |
Introduction to Enhanced Quarterly Disclosures |
7 May 2021 |
Shell
Insights: Energy Transition Strategy |
18 May 2021 |
Annual
General Meeting |
25 May 2021 |
Shell
Insights: Upstream Strategy |
29 July 2021 |
Second
quarter 2021 results and dividends |
28 October 2021 |
Third
quarter 2021 results and dividends |
USEFUL LINKS
Q1 2021 results material
Quarterly Databook Q1 2021
Dividend announcement Q1 2021
Q1 results webcast registration
Enhanced Quarterly Disclosures webcast registration
ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES
This announcement includes certain measures that are not defined
by generally accepted accounting principles (GAAP) such as IFRS,
including Adjusted Earnings, Adjusted EBITDA, CFFO excluding
working capital movements, Cash capital expenditure, free cash
flow, Divestment proceeds and Net debt. This information, along
with comparable GAAP measures, is useful to investors because it
provides a basis for measuring Royal Dutch Shell plc’s operating
performance and ability to retire debt and invest in new business
opportunities. Royal Dutch Shell plc’s management uses these
financial measures, along with the most directly comparable GAAP
financial measures, in evaluating the business performance.
Alternative performance (non–GAAP) measures should not be
considered in isolation from, or as a substitute for, financial
information presented in compliance with GAAP. This announcement
does not replace (and should be read in conjunction with) Royal
Dutch Shell plc’s quarterly unaudited financial statements and
wherever appropriate and practical, reconciliations to relevant
GAAP measures are provided in the quarterly unaudited results at
www.shell.com/investors.
CAUTIONARY STATEMENT
All amounts shown throughout this announcement are unaudited.
The numbers presented throughout this announcement may not sum
precisely to the totals provided and percentages may not precisely
reflect the absolute figures, due to rounding.
The companies in which Royal Dutch Shell plc directly and
indirectly owns investments are separate legal entities. In this
announcement “Shell”, “Shell Group” and “Group” are sometimes used
for convenience where references are made to Royal Dutch Shell plc
and its subsidiaries in general. Likewise, the words “we”, “us” and
“our” are also used to refer to Royal Dutch Shell plc and its
subsidiaries in general or to those who work for them. These terms
are also used where no useful purpose is served by identifying the
particular entity or entities. “Subsidiaries”, “Shell subsidiaries”
and “Shell companies” as used in this announcement refer to
entities over which Royal Dutch Shell plc either directly or
indirectly has control. Entities and unincorporated arrangements
over which Shell has joint control are generally referred to as
“joint ventures” and “joint operations”, respectively. Entities
over which Shell has significant influence but neither control nor
joint control are referred to as “associates”. The term “Shell
interest” is used for convenience to indicate the direct and/or
indirect ownership interest held by Shell in an entity or
unincorporated joint arrangement, after exclusion of all
third-party interest.
This announcement contains forward-looking statements (within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995) concerning the financial condition, results of operations and
businesses of Shell. All statements other than statements of
historical fact are, or may be deemed to be, forward-looking
statements. Forward-looking statements are statements of future
expectations that are based on management’s current expectations
and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in
these statements. Forward-looking statements include, among other
things, statements concerning the potential exposure of Shell to
market risks and statements expressing management’s expectations,
beliefs, estimates, forecasts, projections and assumptions. These
forward-looking statements are identified by their use of terms and
phrases such as “aim”, “ambition”, “anticipate”, “believe”,
“could”, “estimate”, “expect”, “goals”, “intend”, “may”,
“objectives”, “outlook”, “plan”, “probably”, “project”, “risks”,
“schedule”, “seek”, “should”, “target”, “will” and similar terms
and phrases. There are a number of factors that could affect the
future operations of Shell and could cause those results to differ
materially from those expressed in the forward-looking statements
included in this announcement, including (without limitation): (a)
price fluctuations in crude oil and natural gas; (b) changes in
demand for Shell’s products; (c) currency fluctuations; (d)
drilling and production results; (e) reserves estimates; (f) loss
of market share and industry competition; (g) environmental and
physical risks; (h) risks associated with the identification of
suitable potential acquisition properties and targets, and
successful negotiation and completion of such transactions; (i) the
risk of doing business in developing countries and countries
subject to international sanctions; (j) legislative, fiscal and
regulatory developments including regulatory measures addressing
climate change; (k) economic and financial market conditions in
various countries and regions; (l) political risks, including the
risks of expropriation and renegotiation of the terms of contracts
with governmental entities, delays or advancements in the approval
of projects and delays in the reimbursement for shared costs; (m)
risks associated with the impact of pandemics, such as the COVID-19
(coronavirus) outbreak; and (n) changes in trading conditions. No
assurance is provided that future dividend payments will match or
exceed previous dividend payments. All forward-looking statements
contained in this announcement are expressly qualified in their
entirety by the cautionary statements contained or referred to in
this section. Readers should not place undue reliance on
forward-looking statements. Additional risk factors that may affect
future results are contained in Royal Dutch Shell plc’s Form 20-F
for the year ended December 31, 2020 (available at
www.shell.com/investor and www.sec.gov). These risk factors also
expressly qualify all forward-looking statements contained in this
announcement and should be considered by the reader. Each
forward-looking statement speaks only as of the date of this
announcement, April 29, 2021. Neither Royal Dutch Shell plc nor any
of its subsidiaries undertake any obligation to publicly update or
revise any forward-looking statement as a result of new
information, future events or other information. In light of these
risks, results could differ materially from those stated, implied
or inferred from the forward-looking statements contained in this
announcement.
The content of websites referred to in this announcement does
not form part of this announcement.
We may have used certain terms, such as resources, in this
announcement that the United States Securities and Exchange
Commission (SEC) strictly prohibits us from including in our
filings with the SEC. Investors are urged to consider closely the
disclosure in our Form 20-F, File No 1-32575, available on the SEC
website www.sec.gov.
The financial information presented in this announcement does
not constitute statutory accounts within the meaning of section
434(3) of the Companies Act 2006 (“the Act”). Statutory accounts
for the year ended December 31, 2020 were published in Shell’s
Annual Report and Accounts, a copy of which was delivered to the
Registrar of Companies for England and Wales, and in Shell's Form
20-F. The auditor’s report on those accounts was unqualified, did
not include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying the report and did
not contain a statement under sections 498(2) or 498(3) of the
Act.
The information in this announcement does not constitute the
unaudited condensed consolidated financial statements which are
contained in Shell’s first quarter 2021 unaudited results available
on www.shell.com/investors.
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